Daniel v. Ford: 9th Cir. Revives Class Action re Ford Focus Rear Suspension

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Last week, the Ninth Circuit Court of Appeals provided consumers another shot at class certification when it reversed a district court’s decision granting summary judgment to Ford. Daniel v. Ford Motor Co., No. 13-16476 (9th Cir. Dec. 2, 2015) (slip op. available here). Daniel, filed in 2011, alleged that 2005-2011 Ford Focus vehicles contain a rear suspension “alignment/geometry” defect that leads to premature tire wear and dangerous driving conditions, including “decreased control in handling, steering, stability, and braking . . . .” Slip op. at 5. In 2013, Judge Shubb of the Eastern District of California granted summary judgment against the plaintiffs’ claims and denied their motion for class certification, holding that the suit raised too many individualized questions to warrant class treatment, such as the fact that the premature tire wear did not occur at the same rate for all plaintiffs.

First, the appeals court found that the district court had erred in holding that the language of Ford’s New Vehicle Limited Warranty did not cover design defects, including the alleged rear suspension defect, and reversed the lower court’s grant of summary judgment as to the plaintiffs’ claims for breach of express warranty. In applying traditional rules of contract construction, the panel stated that due to Ford’s ambiguous wording, the ambiguity “must be resolved against the draftsman, Ford.” Slip op. at 14 (internal citations omitted). Thus, Ford’s express warranty was deemed to cover both manufacturing and design defects, a positive finding for consumers in class actions, provided auto manufacturers do not choose to cure warranty ambiguities regarding defects covered.

Further, regarding the grant of summary judgment as to their Song-Beverly Consumer Warranty Act claims, the plaintiffs argued that it was improper for the district court to decline to follow a California appellate court decision, Mexia v. Rinker Boat Co., 95 Cal. Rptr. 3d 285 (Ct. App. 2009), which held that latent, or hidden, defects may breach the implied warranty under Song-Beverly, even if not discovered within the implied warranty’s duration of one year. Agreeing with the plaintiffs, the panel clarified that a federal district court sitting in diversity “must follow decisions of the intermediate appellate courts of the state unless there is convincing evidence that [California Supreme Court] would decide differently.” Slip op. at 8 (internal citations omitted, emphasis added). In its review, the panel could not find any evidence to suggest the California Supreme Court would decide Mexia’s holding any differently, which, as noted in the opinion, serves to expand consumer protection and remedies in furtherance of the legislative intent behind the Song-Beverly Act.

Lastly, and perhaps most beneficial for consumers, the appellate court held that the lower court incorrectly found no genuine factual dispute as to reliance, an essential element for a fraudulent omission claim under the California Consumers Legal Remedies Act and Unfair Competition Law. Reliance can be shown by proving that had an omission been disclosed, the consumer would have been aware of it and acted differently; that one would have acted differently can be presumed or inferred if the omission is material, or poses an unreasonable safety risk. The panel found that plaintiffs offered sufficient evidence to create a genuine issue of material fact as to whether consumers would have acted differently if Ford had disclosed the alleged defect, stating, “[a] reasonable fact finder could infer that a vehicle that experiences premature and more frequent tire wear would pose an unreasonable safety risk, such that it can be presumed that the nondisclosure of the safety risk impacted Plaintiffs’ purchasing decision.” Slip op. at 16. Additionally, though Ford had shown that the plaintiffs did not view any of Ford’s advertising prior to purchasing their vehicles, the panel stated that the plaintiffs’ interactions with and information received from Ford-authorized sales representatives prior to purchase, at the Ford dealerships, was sufficient to find that the plaintiffs would have been aware of disclosures made by Ford through its sales representatives, ultimately making it easier for consumers to demonstrate reliance.

In light of this ruling, the Ninth Circuit remanded and ordered the district court to reconsider its denial of the plaintiffs’ motion for class certification.

Authored by: 
Trisha Monesi, Associate